TREASURIES-Bonds up, expected U.S. spending cuts feed safety bid

Thu Feb 28, 2013 9:30am EST

Related Topics

* Month-end buying cited as money managers adjust portfolios
    * Fed's commitment to bond purchases supportive
    * GDP bullish for bonds, jobless claims data bearish


    By Ellen Freilich
    NEW YORK, Feb 28 (Reuters) - U.S. Treasuries rose on
Thursday as the potentially growth-damping impact of prospective
U.S. government spending cuts fed the bid for safe-haven U.S.
debt.
    Month-end buying as money managers adjusted their average
portfolio duration to meet benchmarks was also supportive.
    So was reassurance from Federal Reserve Chairman Ben
Bernanke this week that the U.S. central bank believed in the
usefulness of its unconventional monetary easing strategies and
that its bond purchases would continue.
    Two reports, one on the U.S. economy's growth in the fourth
quarter and the other on the new jobless claims count for the
week ended Saturday, were essentially neutral for bonds.
    The government said U.S. GDP grew 0.1 percent in the fourth
quarter of 2012. That was less than the very modest 0.5 percent
growth the market had expected. 
    New claims for unemployment insurance, however, totaled
344,000, fewer than the 360,000 claims economists had forecast.
    "There was very little reaction in the bond market to this
morning's data," said Tom DiGaloma, managing director at
Navigate Advisors in Stamford, Connecticut. "Jobless claims
dropped significantly, but the revisions to GDP showed growth in
the fourth quarter was still quite weak."
    The benchmark 10-year Treasury note was up 5/32,
its yield easing to 1.89 percent from 1.90 percent late on
Wednesday.
    
    SEQUESTER AHEAD
    President Barack Obama and Republican congressional leaders 
have yet to reach a deal to avert the $85 billion worth of 
spending cuts known as the "sequester" which economists say will
hurt the economy.
    Strategists say the cuts, or protracted negotiations over
them, supported demand for low risk government debt. 
    Thirty-year Treasury bonds rose 13/32 in price,
their yields easing to 3.08 percent from 3.10 percent late on
Wednesday.
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